Fannie Mae is at last taking action against appraisers deemed to have 'questionable practices', and has apparently created a blacklist of those who mortgage lenders and banks should be wary of doing business with.
For appraisers who appear on Fannie Mae's “appraisal quality monitoring” list, any loans will be subject to additional scrutiny by the government-backed enterprise, before it can agree to buy them from lenders. To date, only four names are reported to be on the list, claims the National Mortgage News. However, it reports that Fannie Mae intends to go through its appraiser database with a fine-toothed comb, looking for those guilty of submitting too many questionable appraisals.
According to the report, inconsistencies it will look out for include inflated values of appraised homes, misstating the characteristics of a house, and failing to use the best comparable sales of physically similar properties.
Andrew Wilson, spokesperson for Fannie Mae, warned that this is “just the beginning”. He said that the enterprise will continually be reviewing appraisers, and will add to the list whenever it identifies professionals that it has concerns over.
The blacklist hasn't been made public – for now, only lenders can see it, although those whose names crop up on it will be informed. Those on the list also have already been reported to state appraisal boards for violations of the Uniform Standards of Professional Appraisal Practice. Fannie has created a rebuttal process for appraisers and lenders.
"Lenders are likely to beef up their oversight of appraisers so they don't fall into the trap of submitting loans that could end up being rejected," said Elizabeth Green, a principal consultant at the consulting firm Rel-e-vent Solutions.
"This is another aspect of the same quality vigilance that lenders have to have in place. There's just too much risk if you don't manage for this."